"By the Law of Periodical Repetition, everything which has
happened once must happen again, and again, and again -- and not capriciously,
but at regular periods, and each thing in its own period, not another's,
and each obeying its own law... The same Nature which delights in periodical
repetition in the sky is the Nature which orders the affairs of the earth.
Let us not underrate the value of that hint." ~ Mark Twain

Current Position of the Market

SPX: Very Long-term trend - The very-long-term cycles are in their
down phases, and if they make their lows when expected (after this bull market
is over), there will be another steep decline into late 2014. However, the
severe correction of 2007-2009 may have curtailed the full downward pressure
potential of the 40-yr and 120-yr cycles.

Intermediate trend - SPX is back in a short-term uptrend.

Analysis of the short-term trend is done on a daily basis with the
help of hourly charts. It is an important adjunct to the analysis of daily
and weekly charts which discusses the course of longer market trends.

Daily
market analysis of the short term trend is reserved for subscribers. If you
would like to sign up for a FREE 4-week trial period of daily comments, please
let me know at ajg@cybertrails.com.

APROACHING BULL MARKET TOP?

Market Overview

Two weeks ago, I postulated the possibility that a bull market top appeared
to be forming. In spite of the recent market short-term strength, that possibility
still exists and the current market action could be the formation of an ending
diagonal triangle or some other pattern which points to the end of the bull
market.

Some supporting evidence comes from the NASDAQ 100 which appears to be in
a blow-off mode, while the DOW industrials index is falling farther and farther
behind the other indices. SPX, NDX and RUT have all made new all-time highs.
The DOW is still trading some 300 points below its recent high. The last stages
of the market advance are becoming more and more reminiscent of the 2000 blow-off
in technical stocks!

It is not entirely clear if we are on the last leg of the bull market, or
if there will be one more short-term correction followed by the final leg of
the terminal impulse. Let's wait for more clarity and confirmation before making
a specific forecast with conviction. Some ingredients are still lacking, such
as the still mild readings of our favorite sentiment index, and the fact that
the recent political stand-off in Washington did some damage to the economy
and this is causing the Fed to hold off on its tapering decision. Could this
prolong the topping process? Against that, we must weigh the impact of the
approaching bottoming action of some major long term cycles which are due to
make their lows in about a year. We'll have to see how these two major forces
square off! Of one thing we can be certain: the market itself will tell us
precisely when it is ready to have a major reversal.

Chart Analysis

This is an update of the weekly NDX which is still moving up exponentially
in its blow-off stage. As you can see, this is still a work in process, with
last week's big bullish spike providing a strong confirmation that this is,
indeed, what NDX is doing. The indicated projection for the end of the move
has almost been reached, but this could prove to be too conservative. We still
have another week or two remaining in the current uptrend and, as mentioned
earlier, after a short-term correction another up-leg is possible before the
bull market comes to an end.

In spite of the price strength, the MACD is rising but is still under its
March 2012 peak which is 560 index points lower. Putting it another way, the
NDX has had a 20% increase in price since the time that its MACD made its former
high, while the latter is 12% below the 3/12 high. Surely this, compared to
the price action, should be a red flag for the bulls.

I'll next show the DOW industrials (below) during the same time period. Until
May of this year, the two indices moved pretty much in tandem. But five months
ago, the DJIA began to struggle in its quest for new highs, barely rising above
the former ones during this time span. And finally, in the last month, the
struggle became even more laborious with the net result that, as mentioned
earlier, the DOW is still some 300 points under its last high.

It is difficult to see how these contrasting patterns can change radically
over the next few weeks. And yet, this is what it would take to abort the present
trend toward a bull market top.

One more chart of the SPX hourly (below) will show the aggressive nature of
the current uptrend which started well before the unfortunate political confrontation
came to an end, totally ignoring the possibility of a default of our national
debt.

Because the daily indicators are still positive, it is likely that the uptrend
is not over. Besides, the projected target for this move has still not yet
been reached. But there are some signs that the hourly trend is ready for a
minor correction. For one thing, it has reached the resistance created by the
parallel to a trend line drawn across the last two bottoms. Also, it has fulfilled
a Fibonacci projection to that level.

Finally, the hourly oscillators are telling us that a correction is more than
likely. The middle oscillator (SRSI) is overbought and starting to rolling
over. The lower oscillator (A/D) has already started to decline and is showing
some negative divergence to price. And the top one (MACD) does not have a dynamic
look and is ready to make a bearish cross. The result of the total picture
is that a minor pull-back is imminent.

Breadth

Looking at the hourly price chart of the SPX, you'd think that we are in a
strong market. But if you consider the condition of the indicators below, especially
the Summation Index, you may change your mind. Even the McClellan oscillator
is already showing some negative divergence to the daily price by staying well
below the previous peak while SPX has already made another all-time high. If
we have a minor correction -- which I expect will start on Monday -- it will
bring the oscillator back down and, as the market makes a potential final high,
the negative divergence might even increase.

As for the NYSI, we don't have to guess about what's going to happen in the
next couple of weeks. The picture is already very plain and red flags are sprouting
everywhere. Be cautious! The next time it turns down, it could keep on going
- much lower.

Sentiment Indicators

The SentimenTrader (courtesy of same) long-term indicator score remains
at 60 for the second consecutive week. I would prefer to see it at 70 as an
indication of a market top, and we may well see it there, still. For now, it's
only a yellow flag.

VIX

Last week, VIX lived up to its name by dropping precipitously from its recent
high of 21.34 to a low of 12.34. Nevertheless, it remains at a higher level
than its 3/14 low of 11.30 and its 8/5 low of 11.83, and if it holds last week's
level, it will maintain its steady streak of higher lows against a market which
is making new all-time highs nearly every month! So there is nothing here that
would dissuade one from being concerned by the other red flags that I have
been pointed out.

XLF is participating in the short-term rallies, but has yet to make an important
new high along with SPX - although it came close last week. This keeps it in
a relatively weak position and is another indication that all is not well with
the long term uptrend.

BONDS

TLT has made a short-term low in a long-term downtrend and is bouncing from
an oversold condition. Its prospects for this to develop into a significant
uptrend are not very good, and the choices are more likely to be those of extending
its base or resuming the downtrend.

GLD (ETF for gold)

Gold is looking a little more bullish and may be ready to start a short-term
uptrend which could take it to the vicinity of the previous broken support
line. There, it will meet with strong resistance from a convergence of trend
lines which should arrest its progress. The P&F chart gives it the potential
for a move to 135-140, minimum. The extent of its move will largely depend
on how much more weakness there is in the dollar. It is also past the mid-point
of its 25-26 weeks cycle.

UUP (dollar ETF)

The dollar is clearly being affected by the decision of the Fed to put off
tapering its bond purchases. The weekly chart shows that UUP has broken down
from its intermediate (blue) up-channel and is currently moving in a wide (green)
down-channel. It has almost reached the bottom of this declining channel and
is also at the bottom of the smaller green channel that identifies its short-term
trend. However, there is no sign of deceleration taking place in the MACD,
so UUP's decline is likely not complete. We need to see more obvious signs
of deceleration in its downtrend before it has a chance of turning back up.

USO (United States Oil Fund)

nothing at this time to suggest that it is ready to resume its uptrend.

Summary

The decision by the Fed to put off tapering its bond purchases has given the
market some renewed hope that the bull market still has a ways to go. However,
there are enough red flags being risen by the NASDAQ and the DOW (among others)
to remain cautious about the possibility that a major top formation is taking
place.

With a high expected in the second week in November by some cycle analysts,
we should be particularly attentive to the market action around that time.

FREE TRIAL SUBSCRIPTON

Market Turning Points is an uncommonly dependable, reasonably
priced service providing intra-day market updates, explanations, and commentary,
plus detailed weekend reports. It is ideally suited to traders, but it can
also be valuable to longer-term holders since price projections are provided
using Point & Figure analysis along with best-time estimates obtained from
cycle analysis.

The recent addition of discussions about UPRO and SPXU to the
daily updates should be of interest to those who trade the SPX.

For further subscription options, payment plans, weekly newsletters,
and for general information, I encourage you to visit my NEW website
at www.marketurningpoints.com.
By clicking on "Free Newsletter" you can bring up the latest newsletter
which is normally posted on Sunday afternoons (unless it happens to be a 3-day
weekend; in which case it could be posted on Mondays).

The above comments about the financial markets are based purely on what I
consider to be sound technical analysis principles uncompromised by fundamental
considerations. They represent my own opinion and are not meant to be construed
as trading or investment advice, but are offered as an analytical point of
view which might be of interest to those who follow stock market cycles and
technical analysis.